TIDMANTO
RNS Number : 6839T
Antofagasta PLC
22 July 2020
NEWS RELEASE, 22 JULY 2020
Q2 2020 PRODUCTION REPORT
MAINTAINING SAFE AND RESILIENT OPERATIONS
Antofagasta plc CEO, Iván Arriagada said: "Our focus during the
second quarter has been on the health and safety of our employees
and contractors, and the communities near our operations as the
full impact of COVID-19 has been felt across Chile. Nevertheless,
the hard work and professionalism of our workers and resilience of
our operations have allowed us to continue to operate close to
forecast production levels while ensuring a safe health environment
for our workers.
"During the quarter, we have been running our operations with
approximately two-thirds of our workforce on-site, with the
remainder either quarantining or working at home. As we have gained
experience of working safely in this new environment we have
managed to expand our activity in areas that we initially
restricted such as mine development and maintenance. As a result,
we believe we can continue to operate at current levels until the
end of the year, assuming no further COVID-19 related restrictions
are imposed.
"Antofagasta's operating resilience has meant that despite the
challenges we have faced, our copper production for the half year
is close to our original guidance at 371,700 tonnes. Furthermore,
net cash costs at $1.12/lb are some 6% lower than last year as a
result of the weaker Chilean peso, lower input costs and continued
tight cost control.
"As the outlook remains uncertain, despite the performance of
our operations in the first half of 2020 we are maintaining our
guidance for the full year at the lower end of the original
725-755,000 tonnes range, at a net cash cost of $1.20/lb."
HIGHLIGHTS
PRODUCTION
-- Group copper production in Q2 2020 was 177,700 tonnes, a
decrease of 8.4% compared to the previous quarter, mainly because
of expected lower ore grades at Centinela Concentrates
-- Group copper production in the first six months of the year
was 371,700 tonnes, in line with expectations and 4.0% lower than
in the same period last year
-- Gold production for the quarter decreased by 29.3% to 46,000
ounces compared with Q1 mainly due to lower grades at Centinela,
and for the first six months decreased by 25.5% to 111,100
ounces
-- Molybdenum production was 3,100 tonnes, some 700 tonnes
higher than previous quarter. For the year to date, production was
5,500 tonnes, 14.1% lower than in the same period last year
CASH COSTS
-- Cash costs before by-product credits in the quarter were
$1.50/lb, 1c/lb lower than previous quarter and for the first half
of the year were $1.51/lb, 9.0% lower than in the same period last
year primarily because of the weaker Chilean peso, lower input
prices and tighter cost control
-- Net cash costs were $1.13/lb in Q2 2020 and for the first
half of the year were $1.12/lb, an 2.7% increase compared with the
previous quarter but 5.9% lower than in the first half of 2019.
This was primarily due to lower cash costs before by-product
credits, partially offset by lower by-product credits
COVID-19
-- In mid-May the rate of COVID-19 infections in Chile
accelerated leading to a lockdown being declared in Santiago that
was later extended to other parts of the country. Having continued
at this higher rate for over a month, it now appears to be
decreasing and it is hoped that there will be some relaxation of
the restrictions over the coming weeks
-- Since the beginning of the outbreak, the Company has
coordinated its actions with local and regional government to
introduce many new measures to prevent the infection of its
workforce and local communities and the transmission of the
disease. These measures have included health self-assessments prior
to site access, strict social distancing, health monitoring, the
provision of hygiene kits, strict facilities cleaning protocols and
company-arranged chartered transport to and from the mine sites.
The Company has also established a $6 million fund to support local
communities
-- The Company is operating with approximately two-thirds of its
workforce at its operations with most of the balance working from
home. Mine development and maintenance were initially restricted,
but as the operations have adjusted to the new working conditions,
work in these areas has resumed
-- The Company's growth projects at Los Pelambres, Centinela and
Zaldívar have largely been suspended since March with some limited
work continuing, mostly on the desalination plant at Los Pelambres.
Antofagasta plans to restart the Los Pelambres Expansion and
Zaldívar Chloride Leach projects gradually during Q3 fully
integrating new health protocols for COVID-19 into the revised
project execution plans
-- Costs related to actions taken because of COVID-19 are $38
million of which some $21 million have been capitalised since they
mostly are associated to the growth projects
2020 GUIDANCE
-- Group copper production guidance is unchanged at the lower
end of the original 725-755,000 tonnes guidance range, on the basis
that no COVID-19 related shutdowns are required during the rest of
the year
-- Net cash costs guidance for the full year is also unchanged
at $1.20/lb, 10c/lb lower than originally guided, assuming revised
production guidance is achieved and the Chilean peso averages 800
pesos to the US dollar for the year
-- Capital expenditure for the year is expected to be less than
$1.3 billion, assuming the work on the Los Pelambres Expansion and
Zaldívar Chloride Leach projects ramps-up as expected
OTHER
-- The water situation in Central Chile has improved due to
substantial rain and snow fall during the last two months. Although
this has improved the 2020-21 water balance at Los Pelambres, water
usage optimisation and recycling improvements will continue
-- Negotiations with the workers' union at Zaldívar and the
supervisors' union at Centinela are in the first week of the
government mediation phase which will complete this week. If both
the union and the Company agree, mediation can be extended a
further five working days
-- The labour agreement with the largest workers' union at
Centinela was successfully agreed in June. Negotiations with the
two other unions at Centinela will be completed during the rest of
the year
GROUP PRODUCTION AND CASH COSTS Year to Date Q2 Q1
----------------------- ------ ------
2020 2019 % 2020 2020 %
------------------------------ ------ ------ ------ ------- ------ ------ -------
Copper production kt 371.7 387.3 (4.0) 177.7 194.0 (8.4)
Copper sales kt 374.2 381.4 (1.9) 178.9 195.3 (8.4)
Gold production koz 111.1 149.1 (25.5) 46.0 65.1 (29.3)
Molybdenum production kt 5.5 6.4 (14.1) 3.1 2.4 29.2
------------------------------ ------ ------ ------ ------- ------ ------ -------
Cash costs before by-product
credits (1) $/lb 1.51 1.66 (9.0) 1.50 1.51 (0.7)
Net cash costs (1) $/lb 1.12 1.19 (5.9) 1.13 1.10 2.7
------------------------------ ------ ------ ------ ------- ------ ------ -------
(1) Cash cost is a non-GAAP measure used by the mining industry
to express the cost of production in US dollars per pound of copper
produced.
Investors Media - London
- London
Andrew Lindsay alindsay@antofagasta.co.uk Carole Cable antofagasta@brunswickgroup.com
Telephone +44 20 7808 0988 Telephone +44 20 7404 5959
Andres Vergara avergara@antofagasta.co.uk Will Medvei antofagasta@brunswickgroup.com
Telephone +44 20 7808 0988 Telephone +44 20 7404 5959
Media - Santiago
Pablo Orozco porozco@aminerals.cl
Paola Raffo praffo.van@aminerals.cl
Telephone +56 2 2798 7000
---------------- --------------------------- ----------------- -------------------------------
MINING OPERATIONS
Los Pelambres
Los Pelambres produced 89,900 tonnes of copper in Q2 2020, 3.6%
lower than in the previous quarter as throughput and copper grades
slightly decreased.
In the first six months of 2020, copper production increased by
1.6% to 183,200 tonnes compared with the same period last year.
This increase was primarily due to the higher copper grades and
recoveries, partially offset by lower throughput.
Molybdenum production was 2,800 tonnes in Q2 2020, a 16.7%
increase compared to the previous quarter as a result of higher
grades. Production for the first six months of the year was 5,200
tonnes, 16.1% lower than the same period last year mainly due to
lower throughput and grades.
Cash costs before by-product credits in Q2 2020 were $1.18/lb,
4.1% lower than Q1 and for the first six months of 2020 were
$1.20/lb, 16.7% lower than the same period last year. Tight cost
control, productivity improvements, the weakening of the Chilean
Peso and higher copper production have contributed to reducing unit
costs.
By-product credits were unchanged at $0.41/lb in Q1 2020 as
higher molybdenum production and realised gold prices were offset
by lower molybdenum realised prices. For the first six months of
2020, by-product credits were $0.40/lb, $0.15/lb lower than the
same period last year primarily due to lower molybdenum production
and realised prices, partially offset by higher realised gold
prices.
Net cash costs for the quarter were $0.77/lb, and for the year
to date were $0.80/lb, 6.1% lower than Q1 2020 and 10.1% lower than
the same period last year respectively.
LOS PELAMBRES Year to Date Q2 Q1
----------------------- ------ ------
2020 2019 % 2020 2020 %
------------------------------ ------ ------ ------ ------- ------ ------ ------
Daily ore throughput kt 162.2 168.5 (3.7) 160.4 163.9 (2.1)
Copper grade % 0.71 0.70 1.4 0.70 0.72 (2.8)
Copper recovery % 90.0 87.1 3.3 89.9 90.0 (0.1)
Copper production kt 183.2 180.4 1.6 89.9 93.3 (3.6)
Copper sales kt 186.8 170.9 9.3 88.6 98.2 (9.8)
------------------------------ ------ ------ ------ ------- ------ ------ ------
Molybdenum grade % 0.019 0.021 (9.5) 0.021 0.017 23.5
Molybdenum recovery % 85.5 85.1 0.5 86.4 84.4 2.4
Molybdenum production kt 5.2 6.2 (16.1) 2.8 2.4 16.7
Molybdenum sales kt 4.6 6.4 (28.1) 2.5 2.1 19.0
Gold grade g/t 0.047 0.048 (2.1) 0.049 0.045 8.9
Gold recovery % 72.0 68.4 5.3 68.6 75.7 (9.4)
Gold production koz 29.1 29.8 (2.3) 14.3 14.8 (3.4)
Gold sales koz 27.7 24.9 11.2 14.4 13.3 8.3
------------------------------ ------ ------ ------ ------- ------ ------ ------
Cash costs before by-product
credits (1) $/lb 1.20 1.44 (16.7) 1.18 1.23 (4.1)
Net cash costs (1) $/lb 0.80 0.89 (10.1) 0.77 0.82 (6.1)
------------------------------ ------ ------ ------ ------- ------ ------ ------
(1) Includes tolling charges of $0.18/lb in Q2 2020, $0.20/lb in
Q1 2020, $0.19/lb YTD 2020 and $0.25/lb YTD 2019
Centinela
Total copper production in Q2 2020 was 55,100 tonnes, 17.1%
lower than in the previous quarter, and in H1 2020 it was 121,600
tonnes, 14.3% lower than in H1 2019, primarily as a result of
expected lower grades at Centinela Concentrates.
Production of copper in concentrate was 31,200 tonnes in Q2
2020, 28.4% lower than in the previous quarter due to lower grades
and recoveries, partially compensated by higher throughput. Copper
in concentrate production for the first six months of the year was
74,800 tonnes, compared with 100,100 tonnes in the same period last
year, mainly reflecting lower ore grades. As previously guided,
lower ore grades will continue in Q3 and will then recover in Q4
and into the following year.
Copper cathode production during the quarter was 23,900 tonnes,
4.4% higher than Q1 2020, and for the first six months it was
46,800 tonnes, 11.7% higher than in the same period last year
primarily due to the Encuentro Oxides plant operating above design
capacity and higher grades.
Gold production in Q2 was 31,700 ounces, 37.0% lower than the
previous quarter and in H1 it was 82,000 ounces, 31.2% lower than
H1 last year, primarily due to anticipated lower grades.
Molybdenum recoveries were low in Q2 as the molybdenum plant
operated intermittently during the quarter as a result of ore
conditions being mined. Molybdenum recoveries and production will
increase as molybdenum grades will increase in the following
quarter.
Additional workers successfully completed major maintenance at
the concentrator during the quarter with all the new COVID-19
health protocols maintained throughout the maintenance period.
Cash costs before by-product credits in Q2 were $1.90/lb, 6.7%
higher than in the previous quarter on lower copper production.
Cash costs before by-product credits for the first six months of
2020 were $1.84/lb, 5.7% higher than the same period in 2019 due to
lower copper production, partially compensated by the weaker
Chilean peso and lower input prices, including energy.
By-product credits decreased from $0.61/lb in Q1 to $0.53/lb in
Q2 this year due to the expected fall in gold grades. For the first
six months of 2020, by-product credits were $0.58/lb, 2c/lb higher
than in the same period last year due to improved gold realised
prices, offset by lower production.
Net cash costs in Q2 2020 were $1.37/lb, 17.7% higher than the
previous quarter, and during the first six months of the year net
cash costs were $1.26/lb, 6.8% higher than in H1 2019 due to higher
cash costs before by- product credits.
CENTINELA Year to Date Q2 Q1
----------------------- ------ ------
2020 2019 % 2020 2020 %
------------------------------ ------ ------ ------ ------- ------ ------ -------
CONCENTRATES
Daily ore throughput kt 93.7 96.9 (3.3) 96.2 91.1 5.6
Copper grade % 0.53 0.71 (25.4) 0.43 0.64 (32.8)
Copper recovery % 86.7 84.4 2.7 82.9 89.3 (7.2)
Copper production kt 74.8 100.1 (25.3) 31.2 43.6 (28.4)
Copper sales kt 71.9 101.8 (29.4) 28.9 43.0 (32.8)
------------------------------ ------ ------ ------ ------- ------ ------ -------
Molybdenum grade % 0.008 0.006 33.3 0.010 0.007 42.9
Molybdenum recovery % 22.7 74.8 (69.7) 30.4 11.1 173.9
Molybdenum production kt 0.3 0.2 50.0 0.2 0.1 100.0
Molybdenum sales kt 0.1 0.2 (50.0) 0.1 0.1 0.0
Gold grade g/t 0.210 0.310 (32.3) 0.160 0.270 (40.7)
Gold recovery % 73.0 69.7 4.7 68.6 75.7 (9.4)
Gold production koz 82.0 119.2 (31.2) 31.7 50.3 (37.0)
Gold sales koz 80.7 123.3 (34.5) 30.3 50.4 (39.9)
------ ------ ------- ------ ------ -------
CATHODES
Daily ore throughput kt 55.8 47.8 16.7 58.1 53.6 8.4
Copper grade % 0.64 0.58 10.3 0.65 0.64 1.6
Copper recovery % 69.3 70.5 (1.7) 68.8 69.7 (1.3)
Copper production - heap
leach kt 44.4 38.7 14.7 22.9 21.5 6.5
Copper production - total
(1) kt 46.8 41.9 11.7 23.9 22.9 4.4
Copper sales kt 47.6 45.4 4.8 25.4 22.2 14.4
------------------------------ ------ ------ ------ ------- ------ ------ -------
Total copper production kt 121.6 141.9 (14.3) 55.1 66.5 (17.1)
Cash costs before by-product
credits (2) $/lb 1.84 1.74 5.7 1.90 1.78 6.7
Net cash costs (2) $/lb 1.26 1.18 6.8 1.37 1.17 17.1
------------------------------ ------ ------ ------ ------- ------ ------ -------
(1) Includes production from ROM material
(2) Includes tolling charges of $0.14/lb in Q2 2020, $0.13/lb in
Q1 2020, $0.13/lb YTD 2020 and $0.17/lb YTD 2019
Antucoya
Antucoya produced 20,200 tonnes of copper in Q1 2020, unchanged
compared to the previous quarter as higher throughput was offset by
lower grades and recoveries. Production in the first six months of
2020 was 40,400 tonnes, 7.7% higher than the same period last year
on higher throughput, grades and recoveries.
During the quarter, cash costs were $1.69/lb compared to
$1.78/lb in Q1. For the first six months, cash costs were 23.5%
lower than in H1 2019 at $1.73/lb due to tight cost control, higher
production, favourable local exchange rate and lower input
prices.
ANTUCOYA Year to Date Q2 Q1
--------------------- ----- -----
2020 2019 % 2020 2020 %
---------------------- ------ ----- ----- ------- ----- ----- ------
Daily ore throughput kt 78.0 74.5 4.7 82.4 73.5 12.1
Copper grade % 0.39 0.38 2.6 0.37 0.41 (9.8)
Copper recovery % 73.5 71.3 3.1 71.1 75.9 (6.3)
Copper production kt 40.4 37.5 7.7 20.2 20.2 0.0
Copper sales kt 40.5 36.4 11.3 22.2 18.3 21.3
---------------------- ------ ----- ----- ------- ----- ----- ------
Cash costs $/lb 1.73 2.26 (23.5) 1.69 1.78 (5.1)
---------------------- ------ ----- ----- ------- ----- ----- ------
Zaldívar
Copper production at Zaldívar in Q2 2020 was 12,500 tonnes,
10.7% lower than previous quarter due to lower grades and
recoveries. Production for the year to date was 26,500 tonnes, 3.6%
lower compared with the same period last year due to lower copper
grades and recoveries, partially offset by improved throughput.
Cash costs during Q2 were $1.78/lb, 7.2% higher than in Q1 2020,
and cash costs for the first six months of 2020 were $1.72/lb
compared with $1.79/lb in the same period in 2019, primarily due to
the weaker Chilean peso and lower input prices, partially offset by
lower production.
ZALDÍVAR Year to Date Q2 Q1
--------------------- ----- -----
2020 2019 % 2020 2020 %
--------------------------- ------ ----- ----- ------- ----- ----- -------
Daily ore throughput kt 44.7 37.3 19.8 47.2 42.2 11.8
Copper grade % 0.97 1.23 (21.1) 0.95 0.99 (4.0)
Copper recovery (1) % 59.3 61.8 (4.0) 60.1 61.3 (2.0)
Copper production - heap
leach (2) kt 20.5 21.3 (3.8) 9.5 11.0 (13.6)
Copper production - total
(2,3) kt 26.5 27.5 (3.6) 12.5 14.0 (10.7)
Copper sales (2) kt 27.4 26.9 1.9 13.9 13.5 3.0
Cash costs $/lb 1.72 1.79 (3.9) 1.78 1.66 7.2
----- ----- ----- -----
(1) Restated from average over full leach cycle to 12-month
rolling recoveries
(2) Group's 50% share
(3) Includes production from secondary leaching
Transport Division
Total transport volumes in Q2 2020 were 1.6 million tonnes, 2.1%
lower than in the previous quarter as customer activity reduced,
mainly due to the pandemic.
For the first six months of the year, transport volumes
increased by 2.2% as new transport contracts came into effect
during the period.
TRANSPORT Year to Date Q2 Q1
---------------------- ------ ------
2020 2019 % 2020 2020 %
--------------------------- ---- ------ ------ ------ ------ ------ ------
Rail kt 2,407 2,424 (0.7) 1,186 1,221 (2.9)
Road kt 811 726 11.7 406 405 0.2
Total tonnage transported kt 3,218 3,150 2.2 1,592 1,626 (2.1)
------ ------ ------ ------
Commodity prices and exchange rates
Year to Date Q2 Q1
----------------------- ------ ------
2020 2019 % 2020 2020 %
------ ------ ------- ------ ------
Copper
Market price $/lb 2.49 2.80 (11.1) 2.42 2.56 (5.5)
Realised price $/lb 2.46 2.81 (12.5) 2.94 2.02 45.5
---------------- ------ ------ ------ ------- ------ ------ -------
Gold
Market price $/oz 1,647 1,308 25.9 1,710 1,584 8.0
Realised price $/oz 1,680 1,326 26.7 1,786 1,605 11.3
---------------- ------ ------ ------ ------- ------ ------ -------
Molybdenum
Market price $/lb 9.0 12.0 (25.0) 8.4 9.7 (13.4)
Realised price $/lb 8.7 12.1 (28.1) 7.7 9.8 (21.4)
---------------- ------ ------ ------ ------- ------ ------ -------
Exchange rates
per
Chilean peso $ 813 675 20.4 823 804 2.4
---------------- ------ ------ ------ ------- ------ ------ -------
Spot commodity prices for copper, gold and molybdenum as at 30
June 2020 were $2.74/lb, $1,769/oz and $7.4/lb respectively,
compared with $2.18/lb, $1,607/oz and $8.4/lb as at 31 March 2020
and $2.79/lb, $1,523/oz and $9.2/lb as at 31 December 2019.
The provisional pricing adjustments for copper, gold and
molybdenum for the quarter were positive $183.8 million, positive
$3.3 million and negative $5.1 million respectively.
The provisional pricing adjustments for copper, gold and
molybdenum for the first six months of the year were negative $27.3
million, positive $6.2 million and negative $6.3 million
respectively.
Hornitos transaction
As previously announced, on 31 March the Company agreed to
dispose of its indirect 40% interest in the Hornitos thermal power
station. This has resulted in an exceptional after-tax loss of
approximately $61 million with an impact on attributable net
earnings of approximately $40 million. In the first half of last
year, the Company's share of income generated by Hornitos was $7
million.
Effective tax rate
The effective tax rate for H1 2020 is approximately 35% (before
exceptional items).
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END
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